Future Demand for Carbon Black to be Partially Met Through Recycling

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Researched by Industrial Info Resources (Sugar Land, Texas)--Over the course of this year, plants producing an estimated 345 million pounds per year of carbon black will be permanently closed. Industrial Info has confirmed that Degussa Engineered Carbons LP (Parsippany, New Jersey) will close its Aransas Pass, Texas, carbon black plant in December 2008. This plant closure and decommissioning will remove approximately 125 million pounds per year of carbon black production from the market. Cabot Corporation (NYSE:CBT) (Boston, Massachusetts) ceased operation of its Waverly, West Virginia, plant in March, taking approximately 220 million pounds of carbon black per year from the market. These closures come mostly from a lack of new technology that can improve production quality and the fact that carbon black production is not environmentally friendly when produced using traditional production methods.

Despite these large closures, demand for carbon black is expected to increase slightly in the near future globally. Some of this new demand will be met by a very untraditional method of producing carbon black, tire recycling. Plants that recycle tires are considered by many to be much more environmentally friendly, as they also recover reclaimed steel, oil and other marketable commodities. Currently, three new plants are under construction or consideration in the United States, totaling $125 million of capital projects to be completed by 2010.

In recent years traditional carbon black producers have focused attention on improving production efforts through increased energy efficiency and reliability improvements. Sid Richardson Carbon and Energy Company (Fort Worth, Texas) will add a steam turbine to its plant next year as part of a project budgeted at $45 million that is scheduled to be completed in the first quarter of 2010. This energy increase should improve the company's productivity and ability to remain competitive over time in what is an increasingly challenging market.

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